Flight Centre's smooth flight gains altitude

THE stunning profit recovery at Flight Centre that helped
destroy two private equity bids over six months is continuing to
propel the revitalised travel agency to new heights.

Boosted by ever-increasing numbers of travellers, Flight Centre
now reckons growth in the total value of transactions or bookings
at the agency will approach 15 per cent, a figure it predicted two
months ago. This would translate into a 30 per cent increase in
first-half pre-tax profits, said Graham Turner, the business's
managing director, yesterday.

Earnings are likely to jump to almost $70 million for the six
months to January.

That will be $17 million higher than the corresponding period
last year, during which a late surge in business caused the company
to upgrade its profit forecasts twice between April and June this
year. The improved results had undercut two plans by the private
equity player Pacific Equity Partners and the company's management,
led by its founder Mr Turner, to de-list Flight Centre during its
last financial year.

Rebel minority shareholders argued that the first $1.6-billion
bid under-valued the company and its recovery prospects. Mr Turner
and his board colleagues withdrew their support for PEP's second
offer at the end of July after an unfavourable expert's report into
the revised terms.

Yesterday's announcement from the company underlined that the
strong performance of the second half of 2006-07 - during which
Flight Centre made a pre-tax profit of $99 million, taking the
full-year figure to $151 million - had been sustained.

Mr Turner said the company would now aim for pre-tax profit
growth of 15 per cent for the remainder of the 2007-08 financial
year. Market watchers said this would push last year's result to
$173 million this year.

Mr Turner added a note of caution, warning that the business
climate could change - as it did unexpectedly last year to produce
increased sales.

After yesterday's announcement Flight Centre shares rose 38
cents to $22.41, valuing the company at $2.1 billion, about $500
million more than the last takeover bid. That offer was pitched at
the equivalent of $17 a share.